Protections Available to Employers When Employees Leave

There are numerous ways that an employer can protect itself if it has concerns that an employee will harm the company upon departure.

1. Restrictive Agreements. Prior to employment, upon initial employment, or midterm in employment employees should be required to sign a confidentiality/nondisclosure agreement and a restriction against soliciting customers or co-workers. In some, but not all, states, if agreements are required mid-term there must be consideration beyond continued employment, such as a promotion.

2. Protecting Confidential Information. There can be physical controls (restricted access on a computer, lock and key if it is a hard copy document, restricted access to the locations where the document is).There can be notice access restriction by marking documents “confidential,” but it is important to confine confidentiality designations to important business documents not generally available to the public, such as financial data, customer information, and business arrangements with manufacturers, vendors, clients, and suppliers. Prudent employers will have regular reminders. In highly confidential meetings employees can be required to turn the written materials in for shredding after the meeting. Employers should also be judicious internally about what information is shared and with whom the information is shared.

3. Check Computers. A good IT manager can check traffic on the computer assigned to an employee in the few days before the employee leaves to detect whether the computer has been accessed for non-business purposes and whether the employee has installed a cloud service, drop box, Google documents, or some other drag and drop mechanism to transfer files and company information to a personal computer.

4. Terminate Computer Access. The Company should cut off the employee’s access to the computer system at an appropriate time. If employees are formally told that they do not have access any further, then a federal statute—the Computer Fraud and Abuse Act—may be triggered more readily.If the employee had ongoing authorization to access the company computer but exceeded that authority, the courts have not been particularly helpful to employers.An employer is in a better position if it can show that authorization was not present when the employee continued to access the system or tampered with or destroyed equipment.

5. Exit Interviews. Employers do not have to do exit interviews but this can be good practice. During the exit interview the employer can ask the employee to sign an acknowledgement document confirming that the employee has reviewed the confidentiality and non-solicitation agreement previously signed by the employee. It is also important to provide the employee with the documents he or she signed during the course of employment. In addition, it is prudent to prepare a checklist that the employee would sign off on that has a list of topics discussed.

The employee will then be blocked from arguing that he or she never had notice of these responsibilities. If the employee does sign off on a document and then it turns out that the employee had been lying, there is a basis for a possible fraud claim. On the other hand, if an employee refuses to sign an acknowledgement or checklist, this will be an early warning sign that the employee has something to hide.

6. Inspection of Employee’s Office. In circumstances where there is some concern that an employee may be leaving and planning to take things, there is nothing wrong with going into the employee’s office with a camera and taking pictures of the desk and bookcases and the like or even preparing a more comprehensive inventory. Employers should confirm their internal policies that this kind of review of employee materials is appropriate. At a minimum, employees should not be allowed to clear out their own offices without having somebody present.

7. Examination of Personal Electronic Devices. To the extent that employees have had information on various devices even if it’s their own devices, a reminder document should be given to the employee upon departure to put them on notice that there is an expectation that these devices will be checked.If employees are going to be allowed to keep any devices (the laptop they used, a telephone), or if they have used personal cell phones or personal computers, the company should ask to have its IT professionals check the devices.

8. Review Logs of Restricted Areas. Some businesses require that employees have to badge into areas of the building or have to badge in to gain access to the building at all. It may be appropriate to pull a report prior to the employee’s departure to determine whether or not the employee has been on site at odd or unexpected hours.

9. Use Care in Employee Reviews. Employers should be careful not to disclose confidential information in an employee performance review because the employee has a right to obtain his or her personnel records going forward. There should be ways to talk about performance without disclosing confidential information.

10. Patent and Copyright Protection. Pay attention to the protections of patent and copyright.Very few employers copyright their work but in some areas of highly sensitive or innovative material, these protections should be utilized.Also consider requiring employees who are assigned to prepare or submit ideas or other creative documents to sign “work-for-hire” agreements that assign right, title, and interest to any copyright to the company.

Richard Hunt is a Partner with Barran Liebman LLP, where he represents employers in employment law matters, including trade secrets, non-competition agreements and departing employee disputes. Contact him at 503-276-2149 or rhunt@barran.com.

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CASCADE BUSINESS NEWS

Cascade Business News (CBN), Central Oregon's business newspaper, is local and family-owned and operated by Jeff Martin. CBN is published the first and third Wednesdays of each month. CBN is a division of Cascade Publications Inc.